This article is part of our Rising Star Portfolios series.

Few fields move as rapidly as technology. Businesses creating outsized profits and returns for shareholders quickly get bull's-eyes on their backs, targeted by other companies looking to disrupt their products by selling cheaper alternatives that still prove "good enough." Even if a company continues to dominate its particular field, other changes in technology can shift spending away from its products. Think about how Microsoft still dominates PCs, but it's pressured by sales that are shifting to mobile devices such as smartphones and tablets.

With that in mind, today we're looking at how TriQuint (Nasdaq: TQNT) innovates. Technology companies can innovate either through acquisitions or by spending more on research and development. We'll compare TriQuint's spending in these areas with that of its closest peers and assess whether the company is investing enough in its future.

Research and development
Over the past five years, TriQuint has spent an average of 14.7% of revenues on R&D. Here's how that figure stacks up next to some of its rivals.

Company

2006

2007

2008

2009

2010

LTM

TriQuint

12.5%

13.7%

16.0%

16.7%

14.7%

14.6%

Skyworks (Nasdaq: SWKS)

21.9%

18.1%

21.7%

19.3%

14.2%

13.4%

RF Micro Devices (Nasdaq: RFMD)

20.0%

17.0%

17.0%

15.4%

12.5%

11.9%

Source: Capital IQ, a division of Standard & Poor's. LTM = last 12 months. Dates represent calendar years; yearly totals are for company fiscal years closing in that period.

TriQuint's R&D was very insufficient relative to its peers in 2006. However, as the recession set in, TriQuint continued investing in R&D while competitors cut back. Today, TriQuint stands above RF Micro Devices and Skyworks when it comes to R&D as a percentage of sales. However, in terms of absolute spending, it still slightly trails both RF Micro Devices and Skyworks.

Acquisitions
In technology, some of the best companies have turned growth through acquisitions into an art. IBM has adeptly spun off capital-heavy businesses such as hard drives and PCs while it remains focused on acquiring additional services and software expertise that have transformed its business model.

However, on the opposite end of the spectrum, Hewlett-Packard is often criticized for underinvesting in research and development to the point that it has to overpay on acquisitions to catch up with competitors.

Investors should remember, most of all, that companies are valued by the cash flow they can bring in for their shareholders over time. If companies need to continue making purchases in perpetuity to keep growing, that amounts to a reduction in cash flows, and investors should treat acquisition spending as a continuing outflow against cash flow. With that in mind, let's look at TriQuint's free cash flow over the past five years against cash spent on acquisitions.

G

Source: Capital IQ, a division of Standard & Poor's. LTM = last 12 months. Dates represent calendar years; yearly totals are for company fiscal years closing in that period.

TriQuint isn't an especially acquisitive company. In the past five years, cash acquisitions have played a slightly negative role in overall cash flow, but it doesn't appear that TriQuint's growth strategy relies on acquisitions. The broader concern for investors right now might be the company's cash flow, which lags net income. That's in large part due to tax implications. TriQuint, like many other semiconductor companies that saw large losses in the last decade, was able to record offsetting (positive) entries to its income tax expense in the past year. That move served to bump up net income while having little effect on cash flow.

Final thoughts
The radio frequency market should see continuing high sales in the coming years. As networks such as AT&T continue to roll out more advanced services, equipment and component supplies in the field will stay hot as well. In the end, TriQuint's largest market is mobile, and that's a market thatr should continue seeing heady sales across the next half-decade -- or longer.

If you're an investor, look out for continuing attempts to capture share from larger companies such as Avago (Nasdaq: AVGO) in filtering, while also looking for any sign that future RF components are becoming commoditized at a faster rate than expected. 

If you're looking to stay updated on TriQuint, or any other companies mentioned here, make sure to add them to our free watchlist service, My Watchlist. It's free, and it helps you constantly stay updated on the news and analysis from your favorite companies.

Eric Bleeker owns shares of no companies listed above. The Motley Fool owns shares of IBM, Microsoft, Intel, and TriQuint Semiconductor and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Intel, Microsoft, and AT&T and creating a diagonal call position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.